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June 2007
Special Research Conference Issue: Plenary Sessions
Panelists see mileage fees in Minnesota's long-term future
Carol Molnau
Bernie Lieder
Rick Krueger
Following the keynote presentation by James Whitty, the opening conference session turned to a panel discussion with three Minnesota leaders: Lt. Gov. Carol Molnau, who also serves as commissioner of the Minnesota Department of Transportation (Mn/DOT); state representative Bernie Lieder, chair of the Minnesota House Transportation Finance Division; and Rick Krueger, executive director of the Minnesota Transportation Alliance.
“One of the administration’s top priorities is to secure a stable source of long-term transportation funding during this legislative session,” Molnau began. Minnesota is experiencing the same flattening of gas-tax revenues as Oregon, she noted, and mileage-based user fees offer a promising new alternative. In its 2007 transportation plan, the administration proposed a $5 million demonstration project to promote mileage-based user fees. The pilot project would examine in-vehicle data and revenue-collection technologies to learn what is effective, cost-effective, and secure, she said. [Ed. note: The governor and the legislature were unable to reach agreement on a new funding bill before the session closed on May 21.]
Molnau agreed with Whitty’s view that transportation professionals need to educate the general public about the erosion of the gas tax. This tax, based on consumption rather than usage, is becoming a less efficient way of funding our system. “High-efficiency vehicles are a wonderful thing for many reasons, environmentally as well as economically, but they are on our roadways without paying, some would say, their fair share,” she said.
Molnau also believes the eventual solution needs to include all states as well as Canada and Mexico. “Mileage fees are something that will have to occur, in a timely fashion, but [implementation] has to occur nationally,” she said. And, she added, “hopefully we can find a solution that can be communicated to the general public and, with some help, be accepted.”
The panel next turned to Rep. Lieder. “We need to bring up our funding levels in Minnesota or we’re not going to have roads to drive on,” he began. Transportation as a whole, including transit, must be addressed; the problem is how to gain public acceptance for an increase in taxes.
For the past few years, Lieder continued, Minnesota has been involved in a study of mileage-based charging with the federal government and a consortium of states. [Ed. note: The ITS Institute at CTS is part of this research; see www.its.umn.edu/Research/ProjectDetail.html?id=1999002.] The effort, however, hasn’t dislodged public concerns about a range of issues such as privacy and fairness. “Those can all be addressed,” he said.
Lieder thinks Minnesota could implement a low-level, functional system (without GPS) in the proposed pilot program, using variable rates for different types of vehicles to account for public concerns about fairness. Like Oregon, an integrated collection system would retain the gas tax for unequipped vehicles and follow the same administrative procedures until a long-term phase-out. “The future is definitely going to change, it is still going to be related to a user tax, and the user tax is a fair way to go,” he said.
Krueger said that in a nutshell, Minnesota faces two problems in transportation financing: a long-term structural gap estimated at $1.5 billion to $2.4 billion per year, and a $300 million shortfall next fiscal year. Pricing will not offer a quick solution, he said, because issues such as public and private infrastructure, vehicle modifications, and privacy protections need to be resolved. “New technologies for major structural changes usually take in the range of 30 to 50 years before they are implemented,” he warned.
In the meantime, Krueger said, “these types of things shouldn’t be excuses for not getting financing done…for the investments needed at this time.”
States can be laboratories for pilot programs and projects, Krueger said, but ultimately a national solution is needed. “My point is very simple...right now, a mileage-based system is not ready for prime time,” he said.
Conference attendees viewed project posters and displays during session breaks.
What to do in the short term was the point of a follow-up question from the audience. Whitty answered that Oregon, facing similar resistance to raising the gas tax, has started looking at alternatives such as public/private partnerships, toll roads, and bonding. He predicted that mileage-based charging would need five to six years of development before implementation, and even longer to gain public acceptance.
Molnau said in Minnesota, a good first step was last year’s passage of an amendment dedicating the motor vehicle sales tax to transportation. Now the general public needs to see the state use those resources wisely and deliver on its promises, she said. Molnau doesn’t think the public is ready for a gas-tax increase. What’s more, she cautioned, “people assume that when you raise taxes, you solve the problem—and we certainly wouldn’t [be].”
Lieder again stressed public education. “We’re hitting a point where we have to address [our financing] problem,” he said. “We know we are not meeting needs and the public is getting aware of it.”